Proponents
of so-called medical liability “reform” assert relentlessly that
jury awards in malpractice cases are out of control and that capping
damage awards will lower premium costs for doctors. They claim too that
the tort system dramatically escalates healthcare costs generally, and
that a “crisis” exists in many states because doctors are abandoning
the practice of medicine due to the high cost of malpractice insurance
premiums. The truth is that not one of these assertions is based in
fact.By examining the
studies, statements and conclusions of independent experts and
governmental entities, the true story can be told.

Caps
DO NOT Lower Malpractice
Premiums –Just Ask…

Weiss
Ratings, Inc - Weiss Ratings is an independent
organization that evaluates the financial strength of numerous
institutions, especially insurers. According to a study by the
U.S. General Accounting Office (GAO), Weiss’ insurance ratings were
proven to be more accurate than any of the other rating agencies.
Recently, Weiss concluded that capping malpractice damages does not
lower insurance premiums for doctors. Specifically, they found:

That
caps did not reduce awards, they only slowed the increase in the
size of awards paid by malpractice insurers, and insurers failed to
pass along any savings to those physicians in states with caps,
refusing even in those states to lower physicians’ insurance
premiums.(Weiss Report,
6/3/03)

That
the median annual premium between 1991 and 2002 actually increased more
in states with caps (48.2 percent) than in states without caps (35.9
percent). (Weiss Report, June
2003)

That
in states with caps on non-economic damages, doctors generally fared
worse than doctors in states without caps. The report stated:
“[D]octors in states with caps actually suffered a significantly
larger increase in insurance costs than doctors in states without
caps.”(Weiss Report, 6/3/03)

The
Medical Liability Monitor
–The Monitor monthly publishes the latest information on
medical liability insurance rate. Its annual rate survey, reported by
state and by medical specialty (e.g., internal medicine, general
surgery, ob/gyn) reports the medical
liability insurance rates of all the major insurers of physicians in the
United States. Its
data is the most comprehensive anywhereand is cited by government
agencies, legislative bodies and major media. It
found that:

States
with caps on damages have average insurance premiums that are 9.8% higher
than insurance premiums in states without caps on damages.(Medical Liability Monitor, October, 2004)

In
the five states that recently passed new medical malpractice caps,
premiums rose at nearly double the rate as states that did not pass
a damage cap.Those
states are: MS, NV, OH, OK and TX.(Medical Liability Monitor, October, 2004)

A
Leading Texas
Medical Malpractice Study –
“Stability, Not Crisis: Medical Malpractice Claim Outcomes in Texas,”
is the most extensive examination to date of a state’s medical
malpractice claims and its potential correlation to malpractice
insurance premiums.The
study was done by leading law and medical school professors out of the University of
Texas, University of
Illinois,
and ColumbiaUniversity.The researchers reviewed every
medical malpractice claim resolved by an insurer in Texas over a
fifteen year period beginning in 1988.
Their
findings include the following:

“The
data present a picture of remarkable stability in most respects and
slow, predictable change in others.”

“We
find no evidence of the medical malpractice crises that produced
headlines over the last several years and led to legal reform in Texas and other states.”

The
three biggest insurers in the state have increased rates by an
average of 135% over the last five years (1999-2003).However, data from the Texas Department of Insurance shows
that the number of claims, the value of claims, and the rate of
claims per physician have all remained constant or declined over the
last decade.

The
National Bureau of Economic Research (NBER)
– NBER, founded in 1920, is the nation's leading nonprofit
economic research organization. Twelve Nobel Prize winners in Economics
and three past Chairmen of the President's Council of Economic Advisers
have been researchers at NBER. Their research found little relationship
between caps and premium costs.Their
findings:

“Past
and present malpractice payments do not seem to be the driving force
behind increases in premiums.Premium
growth may be affected by many factors beyond increases in payments,
such as industry competition and the insurance underwriting cycle.
(pg. 20).(http://www.dartmouth.edu/~kbaicker/BaickerChandraMedMal.pdf)

The
state of California, whose MICRA
law is commonly touted as an example of how caps on damages can lower
malpractice premium – California
did not see lower premiums until it enacted insurance reform.

“California doctors’ premiums increased by
450% in the first 13 years after the 1975 passage of MICRA and only began to decrease after
voters enacted the insurance reform initiative known as Proposition
103.”(Foundation for
Taxpayer and Consumer Rights, “How Insurance Reform Lowered
Doctor's Medical Malpractice Rates In California...And How Malpractice Caps
Failed,” March 2003, http://www.consumerwatchdog.org/healthcare/rp/rp003103.pdf)

"While
MICRA was the legislature's attempt at
remedying the medical malpractice crisis in California in 1975, it did not substantially
reduce the relative risk of medical malpractice insurance in California."(James Robertson, Assistant Vice President and Associate
Actuary, SCIPIE Indemnity Company (California's second largest medical malpractice insurer), in written
testimony responding to a question from an administrative law judge
who is overseeing a case in which SCIPIE has requested a 15.6 % rate
hike. April 30, 2003)

The
state of Texas, whose
second largest insurer recently asked for a rate increase despite
the state having passed caps in 2003.

Texas enacted medical malpractice caps in
2003, and despite the caps the state’s second largest insurer has
requested a 19% rate increase.Medical
Protective, a leading insurer, claims on itswebsite that caps are “critical,” but then admits in its
filing that caps do not lead to any significant savings.In the filing requesting a rate increase Medical Protective
stated, “‘Noneconomic damages are a small percentage of total
losses paid.Capping
noneconomic damages will show loss savings of 1.0%.’…And yet a
white paper dated March 2004 and posted on the Medical Protective
website states that capping noneconmic damages is a ‘critical
element [of tort reform] because in recent years we have seen
noneconmic damages spiraling out of control.’” (The Wall Street
Journal, 10/28/04, A6, “Malpractice Insurer Sees
Little Savings in Award Caps”)

The
award winning publication Modern Physician - Modern Physician
reported the results of a study which concluded that high premiums have
to do with factors other than the litigation system.

The
article stated, “The real drivers of the rise in premiums over the
past four years have been low interest rates, a sour national
economy and the legacy of overly aggressive pricing policies in the
years before the ‘crisis’ began in late 2000, according to the
report.”(“Cycles,
not suits, drive med mal trends: study,” Modern Physician, October 15, 2004)

Many
ofthose who support medical malpractice
caps – even many tort reform “experts” and insurance company
executives, admit that caps will not significantly lower premiums.

“[M]any
tort reform advocates do not contend that restricting litigation
will lower insurance rates, and ‘I’ve never said that in 30
years.’” (Victor Schwartz, General Counsel, American Tort Reform
Association, Business Insurance, July 19, 1999)

"We
wouldn't tell you or anyone that the reason to pass tort reform
would be to reduce insurance rates." (Sherman Joyce,
President of the American Tort Reform Association, as quoted in
"Study Finds No Link Between Tort Reforms and Insurance
Rates," Liability Week, July 19, 1999)

“In
1986, after insurers and doctors lobbied for, and Florida lawmakers enacted, a cap on
nonecomic damages for medical malpractice claims, insurers Aetna and St. Paul increased
doctors’ premiums.The
companies argued that, despite earlier promises, malpractice caps do
not actually lead to savings for doctors, much in the manner of
Medical Protective in its recent Texas filing.”(News Release from Foundation for Taxpayer and Consumer
Rights, “Nation’s Largest Medical Malpractice Insurer Declares
Caps on Damages Don’t Work, Raises Docs’ Premiums,” 10/26/04)

"No
responsible insurer can cut its rates after a [medical malpractice
tort 'reform'] bill passes." (Bob White, President of First
Professional Insurance Company, the largest medical malpractice
insurer in Florida, talking about a proposed $250,000
cap in the January 29, 2003 Palm Beach Post)

It
concluded that limiting or capping damage awards to victims would
“only lower health care costs by only about 0.4 percent to 0.5
percent, and the likely effect on health insurance premiums would be
comparably small.”(Congressional
Budget Office, “Limiting Tort Liability for Medical
Malpractice,” 1/08/04)

Malpractice
costs amounted to “less than 2 percent of overall health care
spending. Thus, even a reduction of 25 percent to 30 percent in
malpractice costs would lower health care costs by only about 0.4
percent to 0.5 percent, and the likely effect on health insurance
premiums would be comparably small.”(Congressional Budget Office, “Limiting Tort Liability for
Medical Malpractice,” 1/08/04)

Even
the Budget Submitted by the Bush Administration –
the Administration’s FY ’05 Budget did not state any savings as a
result of caps.

Despite
their claims that severe caps on damages for victims will result in
lower health care costs, the Bush-Cheney budget for 2005 does not
include any healthcare savings associated with these caps.
(Bush-Cheney FY2005 Budget)

Despite
Claims About “Defensive Medicine,” Americans are NOT Getting the Care They Need –Just Ask…

The
CBO disputes the claim that litigation is
prompting doctors to practice “defensive medicine.”

According
to CBO’s 2004 study: “Proponents of limiting malpractice
liability have argued that much greater savings in health care costs
would be possible through reductions in the practice of defensive
medicine.However, some
so-called defensive medicine may be motivated less by liability
concerns than by the income it generates for physicians or by the
positive (albeit small) benefits to patients. On
the basis of existing studies and its own research, CBO believes
that savings from reducing defensive medicine would be very
small.” (Congressional Budget Office “Limiting Tort Liability
for Malpractice,” 1/8/04)

The
Institute of Medicine Institute of Medicine study, To
Err is Human: Building a Safer Health System, concluded that as many
as 98,000 Americans die every year from medical errors.

Henry J.
Kaiser Family Foundation The survey found that 78% of people
believe the quality of health care has stayed the same or worsened over
the past five years, and 55% say they are dissatisfied with the quality
of their health care. (“National
Survey on Consumers’ Experiences With Patient Safety and Quality
Information” - The Kaiser Family Foundation/Agency for Healthcare Research and Quality/Harvard School of Public
Health, November, 2004

High
Premiums are the Result of Insurance Industry Conduct
Just Ask…

USA
Today – the newspaper
concluded that losses in investment income led to high premiums.

“Insurance
companies are boosting rates partly to make up for price wars in the
1990s, when competition kept premiums low, and to counter recent
declines in their investment incomes. That investment profit had
helped offset losses from malpractice damage awards and the
artificially low premiums charged to doctors.” (USA Today, “Hype Outraces Facts in
Malpractice Debate,” 3/5/03)

General
Counsel for the American Tort Reform Association
(ATRA) – stated that insurance was less expensive in the 1990s due to
the investment market.

"Insurance
was cheaper in the 1990s because insurance companies knew that they
could take a doctor's premium and invest it, and $50,000 would be
worth $200,000 five years later when the claim came in. An insurance
company today can't do that." (Victor Schwartz, general counsel
to the American Tort Reform Association, "Dose of
Legality," Honolulu Star-Bulletin, April 20, 2003)

Americans
for Insurance Reform – A
coalition of public interest organizationsfound that malpractice
premiums increase when investment values decrease.

“Since
1975, the data shows that in constant dollars, per doctor written
premiums - the amount of premiums that doctors have paid to insurers
- have gyrated almost precisely with the insurer’s economic cycle,
which is driven by such factors as insurer mismanagement and
changing interest rates.”(AIR,
10/10/02)

A
June 2003 study by non-partisan, independentWeiss Ratings, Inc.,
“Medical Malpractice Caps: The Impact of Non-Economic Damage Caps
on Physician Premiums, Claims Payout Levels, and Availability of
Coverage,” blamed “mismanagement” for the industry’s woes,
and labeled the focus on caps an attempt by “insurance companies
and their supporters . . . to divert the public’s attention away
from long years of mismanagement.”(Weiss Report, 6/3/03)

The
Journal showed in detail how one insurer, St. Paul, released excessive reserves,
triggered a price war, and ultimately with other insurers had
inadequate reserves to cover payouts, triggering sharp hikes in
premiums.(WSJ, 6/24/02)

The
Weiss Report – in 2003, Weiss concluded that
Inflation and Other Insurance Industry Forces Drove Up Doctors’
Insurance Premiums More Than Med Mal Suits.

They
concluded that other factors, aside from medical malpractice suits,
play a much larger role in driving up doctors’ med mal premiums.These factors “continue to drive – med mal premiums up,
evidently overwhelming any reduction in jury awards.”The factors include, among other things, 75 percent inflation
in medical costs and dramatic declines in insurers’ investment
income as the stock market collapsed. (Weiss Report, 6/3/03)

Doctors
are not Leaving
Their numbers are actually increasing –
Just Ask…

The
U.S. General Accounting Office
– GAO concluded that the percentage of physicians was actually
increasing and questioned the data used by the AMA in labeling certain
states so-called “medical malpractice crisis states.”

“The
U.S. physician population increased 26
percent, which was twice the rate of total population growth,
between 1991 and 2001.During
this period the average number of physicians per 100,000 people
increased from 214 to 239.” (GAO
Report, “Physician Workforce,” October 2003)

Their
report questioned the data used by the AMA to make its liability
“crisis” state determinations.The GAO noted that an AMA survey on physicians cutting back
services had a response rate of only 10% and did not specify
cutbacks in specific services.And
while the Florida Medical Association reported that the
neurosurgeons in two counties had ceased practicing, the GAO says it
found at least five such specialists at work in each county.(See Modern Physician, 10/1/03)

The GAO also concluded that, "(M)any
of the reported physician actions and hospital-based service
reductions were not substantiated or did not widely affect access to
health care."(Government Accounting
Office, Implications of Rising Premiums on Access to Health Care,
GAO-03-836 Aug. 2003)

The
American Medical Association
– the AMA itself reported an increase in the number of practicing
physicians.

The
number of physicians has risen in every state every year over the
last 3 years (of available data – 2000–2002), and the numbers of
physicians are higher in every state than they were in 1996.
(American Medical Association, “Physician Characteristics and
Distribution in the U.S.,” 2003-2004 edition)

The
number of physicians per 100,000 people has risen in every state
every year over the last 3 years. (American Medical Association,
“Physician Characteristics and Distribution in the U.S.,” 2003-2004 edition)

There
are no “runaway jury awards”
Jury Awards are Decreasing –Just
Ask…

The
U.S.
Department of Justice – DOJ found
that jury awards are steadily decreasing.

In
studies done in 1995 and 2004, the median plaintiff award in tort
cases has dropped from $50,000 in the 1990s to $37,000 by 2001. (www.ojp.usdoj.gov/bjs/civil.htm#state;
University of Chicago Law Review, Winter 1998)

Between
1992 and 2001 the number of jury trials with punitive damages
remained stable (4% to 6%) and the median punitive damage award
decreased slightly from $63,000 to $50,000. (Civil
Trial Cases and Verdicts in Large Counties, 2001, Thomas H. Cohen,
Steven K. Smith, Bureau of Justice Statistics, 2004)

Malpractice
Filings are Decreasing – Just Ask…

The
NationalCenter
for State Courts (NCSC) - NCSC
found that medical liability
filings have dropped.

Their
research in 2002 showed that since 1992, medical malpractice filings
per 100,000 populations have fallen by 1%.(NationalCenter for State Courts, “Examining the Work of State Courts 2002”)

The
highly regarded publication Business Insurance
- Business Insurance reported that limiting awards to injured patients,
not lowering insurance rates for doctors, is a primary focus of ATRA.

They
reported that “Sherman Joyce, president of the American Tort
Reform Assn.” said “tort reform is not just about lower
insurance rates. ‘We think the real focus (of tort reform) should
be on (restricting) the payment of punitive damages,’ rather than
on lowering insurance costs, he said.”(Business Insurance, 7/19/99)

Insurance
Company Witnesses -insurers told the Florida
legislature that there was no problem with “frivolous lawsuits.”

In
August 2003, tort reform advocates, including insurance industry
executives, were forced to admit their arguments lacked merit after
they were placed under oath by the Florida Senate Judiciary
Committee.The St.
Petersburg Times reported: “The Senate Judiciary Committee,
frustrated by the conflicting information given it by different
interest groups, discredited much of the medical malpractice
rhetoric by placing witnesses under oath. Suddenly, there were no
frivolous lawsuits and Florida was a profitable place for insurance
companies to do business after all.”(St. Petersburg Times, 8/17/03)

Political
Professionals and pollsters
– for political purposes, powerful interests have set an agenda that
deliberately paints trial lawyers as evil.

Karl
Rove, according to the book “Bush’s Brain,” admitted to being
the mastermind behind pushing the tort reform agenda.Rove stated, “The two issues, education and juvenile
justice, were on his agenda list. … Later, we added tort reform.I sort of talked him (George W. Bush) into that one.” (Washington Post,
2/25/03)